Is it too late to buy JMIA stock? Shares of the e-commerce and digital-payments company Jumia Technologies were all over the place today after they reported Q1 earnings results. Is Jumia technologies a buy right now in 2021? Is JMIA stock a safe investment? Will the stock fall lower?
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In 2020, Jumia saw GMV declines in every single quarter except Q4. Gross merchandise value reflects the total sum of the value of every single order for products and services on their platform. From a certain standpoint, if you've been following any of the other e-commerce companies in the world such as Amazon, Shopify, and MercadoLibre, you would have seen that they had very strong GMV growth. So what is happening with Jumia? It’s important to be reminded that their management warned us about this decline, as It was linked to structural changes made within the company. 2020 was a monumental year for Jumia, as they shifted their revenue business model from a first-party to a third-party revenues in order to become more profitable in the future. This shift impacted the revenue growth significantly, and effectively, there is still some adjusting to be done. We also saw Jumia turn away from clunky sales like electronics, to more everyday type consumables product sales like food, cosmetics and clothing. A product of this transition is that they will be selling products that have more buying frequencies than things like electronics. It’ll be many years before its strategy pays off. But to me, this business transition makes complete sense. Additionally, most countries in Africa have lifted their lockdown restrictions, but some countries like Morocco and Kenya still have curfews. And this especially impacts parts of the business like JumiaFood. 2020 was a rough year for Jumia. It included major structural changes, they were forced to implement various cost cutting measures, and they even took the decision of exiting several markets like Cameroon. Any person investing in jumia stock should do their own due diligence before buying. it's not just because you hear the words Amazon of Africa, that you should buy immediately. Yes, there is tremendous potential and I currently also own many shares of jumia. But, you need to know what you're getting yourself into. Looking at growth in the future, with Africa’s surging population, and untapped economic potential, the long term could play into JUMIA’s favor, and looking long term is what we do here. Africa is in the early stages of a digital revolution. The African e-commerce market is projected to grow at a compound annual growth rate of around 17% until 2024. In the past five years, Africa has had the most rapid Internet growth rate in the world. The African e-commerce market isn’t saturated in my opinion. Looking at the continent’s internet usage statistics, there’s still plenty of e-commerce opportunities to uncover #Jumia #JMIA #AmazonOfAfrica
